The moratorium under Section 14 of the IBC prohibits proceedings against the corporate debtor, including prosecution of natural persons associated with the company under Section 138 of the NI Act during the moratorium period.

JUDGMENT

Jasmeet Singh, J. (Oral)

1. This is a petition seeking quashing of the summoning order dated 24.11.2020 passed by the learned MM, Patiala House Courts, New Delhi in CC No. 7554/2020 titled "M/s KTC Trading (P.) Ltd. vs. M/s Ajanta Offset & Packaging Ltd.".

2. The brief facts of the case are that in the present case, the respondent No.2 filed a complaint under Section 138 of the Negotiable Instruments Act (hereinafter called NI Act) against the M/s Ajanta Offset & Packaging Ltd. (hereinafter referred to M/s Ajanta) and others for bouncing of cheque bearing No. 065894 and 065893 for a sum of Rs. 30 lakhs each.

3. The petitioner Nos. 1 and 2 were the promoters/directors of M/s Ajanta. The respondent No.2 had supplied paper to M/s Ajanta and the cheques were issued towards the discharge of the liability of M/s Ajanta.

4. In the present case, the Corporate Insolvency Resolution Process (hereinafter called "CIRP") was initiated under Section 7 of the Insolvency and Bankruptcy Code (hereinafter called IBC) and was admitted on 04.02.2020. In this view of the matter, the moratorium envisaged under Section 14(1) of the Code started operating from the said date.

5. The IRP Mr. Satyanarayana Guddeti on 07.02.2020 addressed emails to all the banks of M/s Ajanta directing not to allow any debit transaction from the accounts without the written approval or instructions of the Interim Resolution Professional (hereinafter called IRP).

6. The cheques in question were presented for encashment on 12.02.2020 and on 13.02.2020, the same were dishonoured with the remarks "payment stopped by drawer".

7. It is stated by Mr. Wadhwa, learned senior counsel for the petitioners that in the present case, in view of the moratorium, the cheques were incapable of encashment and hence, the petitioners cannot be liable for prosecution under Section 138 of the NI Act. He relies upon a judgment of the Bombay High Court in "Asmita Sarang vs. Yogesh Badoni and Another, 2023 SCC OnLine Bom 528".

8. Mr. Sharma, learned counsel for the respondent disputes the proposition and states that the Hon'ble Supreme Court in "P. Mohanraj & Others vs. Shah Brothers Ispat Private Limited", [(2021)6 SCC 258] mandates that in view of Section 141 of the NI Act, prosecution under Section 138 of the NI Act can continue against natural persons i.e., Directors and persons In-Charge of affairs of the company. He also relies upon "M/s Nag Leathers Pvt. Ltd. vs. M/s Dynamic Marketing Partnership" in CRL. APPL. No. 1424/2021 arising out of SLP (CRL.) No. 9077/2019 and more particularly, the relevant portion which reads as under:

"It must therefore be held that the corporate debtor, namely, the appellant herein cannot now be proceeded against under Section 138 of the Act. Consequently, the proceedings initiated against the appellant deserve to be quashed.

Since no natural person was arrayed as accused, the exception carved out in the decision of this Court in P. Mohanraj (supra) does not arise in the instant case."

9. Mr. Sharma, learned counsel also states that the return memo shows "payment stopped by drawer" and there is no evidence as of today that it was stopped pursuant to the mandate issued by the IRP.

10. I have heard learned counsel for the parties.

11. In the present case, admittedly, CIRP proceedings were admitted against M/s Ajanta on 04.02.2020. In my opinion in view of the CIRP proceeding, the moratorium under Section 14 kicks in on the same day. The IRP vide email dated 07.02.2020 had, in accordance with the provisions of the IBC, directed all the financial institutions not to permit any debit transactions from the account of M/s Ajanta without written approval. The relevant portion of the email reads as under:

"...To not to allow any debit transactions from the account without written approval or instructions of the IRP..."

12. Section 14 of the IBC, 2016 reads as under:

"14. Moratorium

(1) Subject to provisions of sub-sections (2) and (3), on the insolvency co